Ticketmaster, Live Nation Defend $575M Merger

Ticketmaster and Live Nation defended their proposed merger Tuesday, painting themselves as struggling music entities that needed each other's strength to survive.

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Ticketmaster and Live Nation defended their proposed merger Tuesday, painting themselves as struggling music entities that need each other's strength to survive.

"Economic times have taken its toll," Michael Rapino, president and CEO of Live Nation, told the Senate Judiciary antitrust committee. "I can hope the economy gets better or I can seek a more pro-active approach. That is the motivation behind the merger."

"This business is in far worse shape than people realize," said Irving Azoff, CEO of Ticketmaster Entertainment Inc.

The companies announced earlier this month that they are negotiating a merger, worth an estimated $575 million, to form a company that would be known as Live Nation Entertainment.

The benefits of this merger, Live Nation said, include the ability to share technology. "The new company will be positioned to take full advantage of its combined online resources, databases and promotional operations to strengthen and enhance the direct connection between artists and fans," the company said at the time.

Live Nation also expected an increased investment in R&D to product technological advances like paperless ticketing, interactive seat access, and mobile delivery.

Members of Congress were not convinced.

"Live Nation has a lock on its side of the market. Think of what this merger would mean if they put both these companies under the same roof. It would combine the largest ticket seller in the world with the largest event producer," said Sen. Charles Schumer, a New York Democrat. "The new merged company would have a hand in every step of the process of going to a concert."

The deal "should be examined closely," said Sen. Orrin Hatch, a Utah Republican.

Sen. Amy Klobuchar, a Minnesota Democrat, said she was concerned that the deal would result in higher tickets prices, make it harder for independent promoters to compete, and create problems with re-sellers.

Ticketmaster owns re-seller Web site TicketsNow.com. Tickets for Bruce Springsteen and the E Street Band went on sale earlier this month via Ticketmaster.com. If a customer's first choice seats were not available, however, Ticketmaster sent them to TicketsNow, a site similar to eBay or StubHub that allows ticket holders  or scalpers  to sell their tickets independently.

Confused customers quickly snapped up tickets on TicketsNow.com that were sometimes double or triple the price of tickets on Ticketmaster.com.

After Springsteen expressed outrage, Ticketmaster issued an apology and promised to refund the difference between the Ticketmaster and TicketsNow tickets. But some customers who have contacted PCMag.com have reported trouble in getting their refunds, and senators expressed concern Tuesday that the incident might happen more often if the Live Nation merger proceeded.

"Ticketmaster blames technical glitches ... but the incident does raise a serious question: will the combined company be tempted to redirect [to resellers sites in the future] because there are now no competitors to keep this behavior in check?" asked Sen. Herb Kohl, a Wisconsin Democrat and chairman of the Senate Judiciary's antitrust committee.

"Talk about a way to have your cake and eat it too," Schumer said. "Bruce Springsteen said Ticketmaster abused his fans, and I agree with The Boss."

Ticketmaster's Azoff said he was "angered and embarrassed by the incident" and promised to "never let something like this happen."

Azoff, who joined Ticketmaster as its CEO four months ago, said he would not personally have suggested that the company buy TicketsNow, but would not commit to selling it when pressed by Schumer.

Ticketmaster did not respond to press inquiries about the glitch earlier this month or on Tuesday.

New Jersey Attorney General Anne Milgram also announced Monday that her office reached a settlement with Ticketmaster whereby a random drawing will create the opportunity for 1,000 fans who filed complaints against Ticketmaster with the Division of Consumer Affairs by February 17 to purchase two tickets each to one of the two concerts scheduled for May 21 and May 23 at the Izod Center.

Those not selected will get a $100 Ticketmaster gift certificate and a chance to get pre-sale tickets to a future Springsteen concert.

Jerry Mickelson, chairman and executive vice president of JAM Productions and Seth Hurwitz, co-owner of I.M.P. Productions and the 9:30 Club in Washington, D.C., were not convinced that Ticketmaster and Live Nation were in such dire straights.

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"With all their quarterly reports, they say business is great," Hurwitz said. "Whichever it is, I'm not sure how combining improves any situation."

"If this merger is allowed to happen, my biggest competitor will have access to all my records and they can control which shows are promoted and much more," Hurwitz continued. "This would be like Pepsi forcing Coke to use its services as distributors."

"It is my belief this merger is vertical integration on steroids," Mickelson said. "The amalgamation of these two companies into one should make them the poster child for why this country has and needs antitrust laws."

Chloe Albanesius has been with PCMag.com since April 2007, most recently as Executive Editor for News and Features. Prior to that, she worked for a year covering financial IT on Wall Street for Incisive Media. From 2002 to 2005, Chloe covered technology policy for The National Journal's Technology Daily in Washington, DC. She has held internships at NBC's Meet the Press, washingtonpost.com, the Tate Gallery press office in London, Roll Call, and Congressional Quarterly. She graduated with a bachelor's degree in journalism from American University...
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